Surging bond yields have not spooked stock market investors. The latest sharp move higher in bond yields has caused stock market investors to ask the question, At what point do higher interest rates potentially begin to hurt stock prices? It is logical to think higher interest rates will eventually slow the economy. Borrowing costs rise and higher inflation — which has accompanied higher interest rates in the past — erodes purchasing power. These are all reasonable points to make when evaluating the relationship between stocks and bond yields. As we see it, given the still-low rate environment, rising interest rates do not put the aging bull market at risk.

The 10-year Treasury yield has risen about 110 basis points over the past five months to 2.46%. That move in rates has certainly not spooked the stock market.

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